Fed Chair Janet Yellen still backs gradual interest-rate hikes

ECONOMY

Yellen says Fed rate hikes on track

In her first public remarks since the U.S. central bank hiked rates on June 14, Federal Reserve Chair Janet L. Yellen gave no indication Tuesday that her plans for continued monetary policy tightening had shifted.

“We’ve made very clear that we think it will be appropriate to the attainment of our goals to raise interest rates very gradually,” Yellin said during an event in London. “Asset valuations are somewhat rich if you use some traditional metrics like price-earnings ratios, but I wouldn’t try to comment on appropriate valuations, and those ratios ought to depend on long-term interest rates.”

Yellen’s comment on asset prices follows remarks earlier Tuesday by Fed Vice Chairman Stanley Fischer, who said increased valuations could only partly be explained by an improving economic outlook.

Fed officials have been wrestling over how the central bank should react to seemingly conflicting signals about the U.S. economy. Joblessness dropped to 4.3 percent in May. Yellen and some of her colleagues have called for continued, if slow, tightening because they expect that labor-market gains will eventually trigger higher wages and overall prices.

On Tuesday, Yellen nodded to concerns among some economists that inflation expectations might be declining.

“What we would worry about is if it looked like inflation expectations were slipping because that could make low inflation become endemic and ingrained. So we certainly want to avoid that,” she said.

Bloomberg News

MUSIC INDUSTRY

Pandora co-founder

to step down as CEO

Struggling music-streaming service Pandora is shaking up its leadership team.

On Tuesday, the company announced that chief executive and co-founder Tim Westergren will step down from his position and his seat on the board. The company named its chief financial officer, Naveen Chopra, as interim CEO while it searches for a Westergren’s successor, Pandora said in a news release.

According to the Verge, the decision to step down was Westergren’s.

“I am incredibly proud of the company we have built,” Westergren said in the news release. “We invented a whole new way of enjoying and discovering music and in doing so, forever changed the listening experience for millions.” Pandora did not say whether Westergren would continue to have a role at the company.

In the release, Pandora said that President Mike Herring and Chief Marketing Officer Nick Bartle are also departing the company.

Pandora has faced increased competition with other streaming services and struggled to adapt to the changing climate of the music industry. Pandora did not respond to requests for comment.

“As listeners continue to move from traditional terrestrial radio to more dynamic and flexible offerings, it is the board’s belief that this transition continues to present a massive opportunity,” board member Roger Faxon said in the statement.

Westergren is one of three co-founders of the Oakland-based company, which was started in 1999. He led Pandora as CEO from 2002 to 2004 and returned to that role in 2016.

Alex Schiffer

Also in Business

Facebook said Tuesday that 2 billion people are regularly using its flagship service. Mark Zuckerberg, its chief executive, disclosed the number to his followers in a Facebook post, saying: “It’s an honor to be on this journey with you.” The user base is bigger than the population of any single country and of six of the seven continents. It represents more than a quarter of the world’s 7.5 billion people. Facebook defines a monthly active user as a registered Facebook user who logged in and visited Facebook through its website or a mobile device, or used its Messenger app, in the past 30 days.

The Federal Trade Commission’s antitrust lawsuit against iPhone chip supplier Qualcomm can proceed, a federal judge ruled late Monday. Judge Lucy H. Koh of the U.S. District Court for the Northern District of California denied Qualcomm’s motion to dismiss the FTC’s lawsuit, saying that the agency’s allegations would amount to anticompetitive behavior on Qualcomm’s part if proved true. The FTC sued Qualcomm in January, alleging that the company engaged in anticompetitive tactics to maintain a monopoly on the chips that let cellphones connect to mobile-data networks. Qualcomm argued that even if the allegations were true, they would not amount to wrongdoing.

U.S. home prices rose at a healthy clip in April, though the increase slowed a bit from the previous two months. The Standard & Poor’s CoreLogic Case-Shiller 20-City Composite Home Price NSA Index climbed 5.7 percent in April, after increases of 5.9 percent in February and March. Developers are breaking more ground on new homes, but they haven’t been doing so quickly enough to keep up with sales. The number of housing starts fell 5.5 percent in May from the previous month.

Amazon.complans to extend its U.S. hiring binge into Michigan by spending up to $140 million and adding 1,600 full-time jobs at a new facility near Detroit after being awarded a $5 million state incentive Tuesday. It was the second time in six months that the Michigan Strategic Fund authorized a grant for the e-commerce giant to open a fulfillment center, where items are stored, packaged and shipped.The facility will be located in Romulus. The other center will be based about 12 miles away in Livonia. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post.)

The International Monetary Fund has trimmed its outlook for the U.S. economy, citing the number of uncertainties that surround President Trump’s plans to boost economic growth. The IMF forecasts that the U.S. economy will grow this year at an annual rate of 2.1 percent. That would be an improvement over last year’s 1.6 percent growth rate but down from the IMF’s April forecast for growth this year of 2.3 percent. The IMF also trimmed growth for next year and said the economy would have a hard time achieving the 3 percent growth goal set in the president’s first budget.

From news reports

Coming today

10 a.m.: National Association of Realtors releases pending home sales index for May.